Coke vs. Pepsi

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Re: Coke vs. Pepsi

Question #1: Distinguish Financial Statements

BALANCE SHEET| COCA COLA| PEPSI CO|
ASSETS| 19,145| 22,660|
LIABILITIES| 10,742| 12,936|
OWNERS EQUITY| 8,403| 6,401|
CASH| 1,648| 311|
INVENTORIES| 890| 1,016|
ACCOUNTS RECEIVABLE | 1,666| 2,453|
PRE PAID EXPENSES| 2,017| 499|
INVESTMENTS AND OTHER ASSETS| 8,549| 1,396|
PROPERTY PLANT EQUIPMENT| 5,685| 7,318|
ACCOUNTS PAYABLE| 3,141| 3,870|
LOANS PAYABLE/SHORT TERM BORROWING| 4,459| 3,921|
LONG TERM DEBT| 687| 4,028|
ACCRUED/PAYABLE INCOME TAXES | 1,037| 123|
The two companies are difficult to distinguish as both companies have made investments however the method in which they have made those investments differ. Coke has approximately 45% of its total assets through investments made in the bottling industry. Pepsi has consolidated financial statements taking into account Frito Lay as a subsidiary. It would appear that Pepsi is the larger company because their total amount of assets is greater due to the consolidation of Pepsi and Frito Lay. However this in turn leads to Pepsi carrying significantly more debt in its financial structure compared to Coke ($4,028 vs. $687)

INCOME STATEMENT | COCA COLA| PEPSI CO|
NET INCOME| $3,533| $1,993|
RETURN ON ASSETS| 18.5%| 9.3%|
RETURN ON EQUITY| 42%| 31%|
Coca Cola appears to be more profitable.
Question #2: Operating and Investing Strategies
a) Coke and Pepsi are in similar business markets when it comes to their base product which is soft drinks however there are differences. Coke has stayed close to its base which is soft drinks and has worked on branding Coke all over the world. Coke has expanded into the juice market with the investment in Minute Maid and into the bottling market with investments low performing bottlers. Pepsi on the other hand is a soft drink company that has tried to get involved in other segments such as snacks and...
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